George Akerlof

2001 Economic Nobel Prize Winner

Professor at the McCourt School of Public Policy at Georgetown University.

George Akerlof is a Nobel Prize winning economist whose best known work includes research into asymmetrical information in markets and his use of psychological and sociological theories in economics. He has worked as a professor at several prestigious universities.

George Akerlof was born on the 17th of June 1940 in the Connecticut city of New Haven. He attended Lawrenceville School before going on to study at Yale University. He graduated with a B.A. in 1962 and moved to M.I.T, where he completed his doctorate, becoming a Ph.D. in 1966.

After graduating from M.I.T, Akerlof began working at the University of California as an assistant professor. Whilst in this role, he also spent some time at the Indian Statistical Institute as a visiting professor. In 1969, he spent the summer working at Harvard as a research associate. In 1970, he became an associate professor at California, becoming a professor in 1977. In 1973 and 1974 he also held a position on the Council of Economic Advisors as a Senior Staff Economist. He worked with the Board of Governors of the Federal Reserve System for a year between 1977 and 1978 as a visiting research economist.

Akerlof moved to the London School of Economics in 1978, where he occupied a prestigious role as Cassel Professor of Money and Banking. In 1994, Akerlof began working with the Brookings Institute as a senior fellow, a role he still occupies today. He is also currently still a professor at the University of California.

In addition to his work in academia and in research, Akerlof has held a variety of editorial positions. He has worked as an associate editor for several journals, including the Journal of Economic Behavior and Organization, Quarterly Journal of Economics and American Economic Review and as a co-editor of Economics and Politics.George Akerlof is a fellow of several prestigious organisations, including the Econometric Society, the American Academy of Arts and Sciences, and the Institute for Policy Reform.

George Akerlof is a former director of National Bureau of Economic Research and has been president of the American Economic Association. In the year 2000, Akerlof was awarded an Honorary Doctorate from the University of Zurich.

Akerlof is married to Janet L Yellen, a professor of economics at the University of California and vice chairman of the Board of Governors of the Federal Reserve System. They have one child, a son named Robert who also works in economics.

George Akerlof is co-director of the Canadian Institute for Advanced Researchs Social Interactions, Identity and Well-Being program. He is also a trustee Economists for Peace and Security, an organisation which aims to encourage the use of non-military solutions in problem solving, all over the world.

Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

The global financial crisis has made it painfully clear that powerful psychological forces are imperiling the wealth of nations today. From blind faith in ever-rising housing prices to plummeting confidence in capital markets, "animal spirits" are driving financial events worldwide. In this book, acclaimed economists George Akerlof and Robert Shiller challenge the economic wisdom that got us into this mess, and put forward a bold new vision that will transform economics and restore prosperity.

Akerlof and Shiller reassert the necessity of an active government role in economic policymaking by recovering the idea of animal spirits, a term John Maynard Keynes used to describe the gloom and despondence that led to the Great Depression and the changing psychology that accompanied recovery. Like Keynes, Akerlof and Shiller know that managing these animal spirits requires the steady hand of government--simply allowing markets to work won't do it. In rebuilding the case for a more robust, behaviorally informed Keynesianism, they detail the most pervasive effects of animal spirits in contemporary economic life--such as confidence, fear, bad faith, corruption, a concern for fairness, and the stories we tell ourselves about our economic fortunes--and show how Reaganomics, Thatcherism, and the rational expectations revolution failed to account for them.

Animal Spirits offers a road map for reversing the financial misfortunes besetting us today. Read it and learn how leaders can channel animal spirits--the powerful forces of human psychology that are afoot in the world economy today.

Reviews:

"Akerlof and Shiller are the first to try to rework economic theory for our times. The effort itself makes their book a milestone. . . . And their book takes their case not just to economists, but also to the general reader. It is short (176 pages of text) and easy enough for laymen to understand."--Louis Uchitelle, New York Times Book Review

Identity Economics provides an important and compelling new way to understand human behavior, revealing how our identities--and not just economic incentives--influence our decisions. In 1995, economist Rachel Kranton wrote future Nobel Prize-winner George Akerlof a letter insisting that his most recent paper was wrong. Identity, she argued, was the missing element that would help to explain why people--facing the same economic circumstances--would make different choices. This was the beginning of a fourteen-year collaboration--and of Identity Economics.

The authors explain how our conception of who we are and who we want to be may shape our economic lives more than any other factor, affecting how hard we work, and how we learn, spend, and save. Identity economics is a new way to understand people's decisions--at work, at school, and at home. With it, we can better appreciate why incentives like stock options work or don't; why some schools succeed and others don't; why some cities and towns don't invest in their futures--and much, much more.

Identity Economics bridges a critical gap in the social sciences. It brings identity and norms to economics. People's notions of what is proper, and what is forbidden, and for whom, are fundamental to how hard they work, and how they learn, spend, and save. Thus people's identity--their conception of who they are, and of who they choose to be--may be the most important factor affecting their economic lives. And the limits placed by society on people's identity can also be crucial determinants of their economic well-being.

Reviews:

"Akerlof . . . and Kranton . . . explore the links between our identities and the everyday decisions we make about earning and spending money. Their goal is to add a more personal touch to economics."--New York Times

Phishing for Phools: The Economics of Manipulation and Deception

Phishing for Phools therefore strikes a radically new direction in economics, based on the intuitive idea that markets both give and take away. Akerlof and Shiller bring this idea to life through dozens of stories that show how phishing affects everyone, in almost every walk of life. We spend our money up to the limit, and then worry about how to pay the next month’s bills. The financial system soars, then crashes. We are attracted, more than we know, by advertising. Our political system is distorted by money. We pay too much for gym memberships, cars, houses, and credit cards. Drug companies ingeniously market pharmaceuticals that do us little good, and sometimes are downright dangerous.

Phishing for Phools explores the central role of manipulation and deception in fascinating detail in each of these areas and many more. It thereby explains a paradox: why, at a time when we are better off than ever before in history, all too many of us are leading lives of quiet desperation. At the same time, the book tells stories of individuals who have stood against economic trickery—and how it can be reduced through greater knowledge, reform, and regulation.

Review:

"In an entertaining and lively account, Akerlof and Shiller show that while the pursuit of profits may lead to products that enrich our lives, it may also lead to manipulation and deception. Much of recent innovation has led to products that make cheating the public easier. The implications are complex and profound."--Joseph E. Stiglitz, Nobel Laureate in Economics